All eyes on court drama

When the fight between
Seven
Media Group and its former executive
James Warburton
kicks off this week, there will be more than just television stations tuning in.

The legal issues in the case have far wider significance, workplace lawyers say, and will be closely watched.

“Every senior executive in the city" will be watching the case, said Middletons partner Gerard Phillips.

They almost all had restraints imposed as part of their contracts, he said.

Seven Media has taken legal action against Mr Warburton to delay his start date as
Ten Network
’s chief executive by 15 months, from July 14 this year to October 14, 2012. According to Seven Media, Mr Warburton could not resign until his contract expired on July 13 and then had to give three months’ notice. It also said the management equity plan Mr Warburton signed included a 12-month non-compete clause.

Seven Media was also pursuing Ten for inducement of breach of contract, but unexpectedly dropped that claim on Friday.

The trial kicks off in the NSW Supreme Court tomorrow before judge Michael Pembroke.

Most closely watched will be whether Mr Warburton is restrained from working for a competitor due to his participation in the management equity plan.

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While it is ultimately at the judge’s discretion whether to uphold the restraint – he must decide if it is reasonable in all the circumstances– there are some guiding principles.

The “length and the breadth of the restraint will be considered", said Mr Phillips, and it “can’t take you out of your chosen field of employment" for a long period of time.

The judge will also look at whether the employee was aware of the restraint, whether money changed hands and whether the employee sought legal advice, Mr Phillips said.

There is also a question of whether Mr Warburton’s contract is a fixed term.

He argues it is, and when it comes to an end in July this year, he is free to go without giving any notice. Seven will argue he is required to give three months’ notice, but only once his contract has expired.

Fixed-term contracts are not uncommon in the media industry, lawyers say, particularly in television, and provide certainty for both parties.

Mr Warburton will also argue that Seven’s conduct breached the contract to the point where he was entitled to terminate it, known as repudiation.

Lawyers for Mr Warburton, who quit as chief sales and digital officer at Seven Media on March 2, have claimed Seven Media chief executive
David Leckie
told him: “If you want to leave and do Ten, no dramas. We will let you go and get on with it."

The court will have to rule on whether his conversation took place, and Mr Warburton will need to show he relied on Mr Leckie’s claim and suffered as a result.